With camera phones rapidly encroaching on the lower end of the camera market, manufacturers are looking for areas in which they can offer value that's simply not available from phone cameras, and Jay offered some interesting perspective on how things are shaking out in the market. They're also striving to make it easier to integrate a dedicated camera into a connected lifestyle--to that end, Samsung launched quite a selection of Wi-Fi-enabled digital cameras at the show--and this also formed an interesting topic for discussion. Other key points include some history on backside illuminated sensors, thoughts on the future of SLR cameras, and a little info on how Samsung's vertically integration has allowed it both to differentiate its products, and a degree of insulation from issues that have affected much of the camera market during 2011.

Dave Etchells: Last year saw several disasters in Asia that affected the camera industry, including the Japanese earthquake and tsunami, and the floods in Thailand. How was Samsung affected, if at all, by these disasters?

Jay Kelbley: Samsung is probably the most vertically integrated camera manufacturer on the planet. We’re making our own batteries, our own memory, DSPs, OLEDs, sensors, everything. There’s a few critical components in cameras that are still sourced. The most common are shutters. There was some impact to shutters.

DE: Copal has a big plant in Thailand that got blasted, right?

JK: We had some impact to two models, but since it was just the one component – the shutters – we were able to recover fairly rapidly.

DE: So you’ve got a pretty unique experience in the industry. You’ve worked for a number of the large imaging companies and now you’re at Samsung. Samsung often comes at things from a different angle. How do you see this playing out in their photo product development? What’s different about Samsung in this business than other companies you’ve worked for?

JK: That’s a really great lead in. As a company coming into photography comparatively late – Samsung’s been working in cameras for about 20 years as an OEM manufacturer and supplier to other companies and more recently as a branded manufacturer – it’s taken us some time to try to build credibility and awareness. In terms of photo and photographic improvements, they’re pretty incremental over time – half an F-stop here on a lens and ISO, etc. At CES this year, we’re announcing that we’re doubling down – since we’re in Vegas – on Wi-Fi. In our compact line, we announced six new cameras; four of them we’re launching under the umbrella of Samsung Smart Cameras. The cameras are Wi-Fi-enabled, but more significantly, they’re enabled to work more directly with smart devices. We’ve come up with applications for AndroidOS, for iOS, that allow people to communicate and even control their cameras from their smart devices, from their smart phone, which is pretty cool. We really want to be known as the innovator in connected and smart cameras.

DE: That leads right into the next question, that cell phones and cameras are vying for co-existence right now and Samsung is in a unique position because you manufacture both. What’s your vision for how phones and cameras will evolve together?

JK: I hate to use this word, but they’re definitely converging. I know that word’s used a lot. It’s interesting. People ask me, as we’re putting all this connectivity into cameras, when do we add a browser? When does a camera basically become a smart phone? And they are definitely converging. With that, in two or three years from now – if we take our time machine out there – if you’ve got an 18X zoom on a smart phone, is it a smart phone or is it a camera? Or if you add phone capabilities to a camera platform, does that make it a camera with phone connectivity? Customers aren’t going to care. It’s a lifestyle device that does everything for them. Since we are such a key player in smart phones and smart phone technology, really a core player in imaging also, we’re in this unique position where we can drive and really own that convergence.

DE: It seems to be ultimately a true convergence where you have a unified device at some point down the road.

JK: Personally I do think so, absolutely. Right now, the trick for camera manufacturers is to find reasons for people to take their camera with them because everyone is using their smart device as their primary camera. It’s with them all the time. It instantly boots. There’s no shutter lag. It’s tremendously convenient. But your smart phone doesn’t have a long zoom on it. Generally they don’t have great low light sensitivity. Those are the two big advantages of a camera versus a smart device today. We want to make it so people have reason to bring their camera with them. That long zoom camera that we’re building now, if it interoperates and interacts and connects with your smart device, that’s great. It hooks right into your lifestyle without wires. You can move your images to your smart device where you want them, share them, edit them, whatever you want to do. That makes your camera part of your lifestyle instead of something you bring only on one or two special events.

DE: It sounds almost like camera as peripheral. It's sort of like the camera is a peripheral device for the smart phone because that’s where you end up dealing with the pictures and uploading them and that sort of thing.

JK: That’s a good way to look at it. I think the one cool thing we’ve got that breaks that up a little bit and helps is that our cameras are all Wi-Fi-direct enabled, so even if you have an older smart phone that can’t broadcast as a soft access point, our camera can act as a soft access point. So it can actually be the controller in the almost peer-to-peer relationship between the two devices, which is unique in the market right now, as well.

DE: So to clarify it for the readers, basically the camera itself becomes a Wi-Fi node that then your smart phone can connect to and interact with.

JK: Right, absolutely.

DE: Another question, relative to cell phones is, do you see the ubiquity of cell phones changing the kinds of cameras that people are buying? If they have the cell phone in their pocket all the time, how does that influence the type of camera they’re buying and shift the mix of products?

JK: You can see that in the market data that’s out there. As people have a good smart phone camera or phone camera they’re not buying cameras with no zoom any more, or 5X zoom cameras. They’re driving to things that differentiate from that and add extra value – long zoom, low light capabilities, faster frame rates – all those things that you can’t get in a smart device are what people are buying in cameras today.

DE: So you see maybe shortly, a few years from now, even 5X cameras won’t be on the market any more? It will all be 10X and above?

JK: I think once 5X optical zoom finds its way broadly into smart devices, there probably won’t be a reason for a 5X zoom point and shoot. But there are big developments in lenses and cameras, and right now where people are buying in 20X zoom range for still cameras – 40X zoom, 50X zoom, 60X zoom – it will keep pushing that. There’s a lot of technology that has been commercialized into smart phones that’s been around a while that’s now driving the camera business to change. One of those, we’ve talked about before, is backside-illuminated CMOS. So two, three, four years ago, people started to notice sudden improvements in phone cameras. Phone cameras years ago weren’t very good in low light. They were pretty much unusable. And as BSI, or backside-illuminated CMOS, was commercialized for use in smart phones and phone cameras, there was a sudden jump in the ability of smart phones to shoot in low light, and image quality. That technology is being scaled up now into point and shoot cameras, to larger sensors. And we’re seeing that jump of two or three stops in sensitivity suddenly hitting the compact camera market. But that’s a result of innovation that happened in the smart phone market.

DE: That’s very interesting. I didn’t realize that. So BSI actually came from smart phones, initially, from camera phones.

JK: Initially it actually came from scientific imaging. BSI has been done for decades in the astronomy market. But they’d manually back thin a whole [PH] wafer down to a sensor. These things were astronomically expensive. Bad pun, sorry. But the commercialization jump moved from that to military devices and medical devices, and then jumped past cameras down to smart phones, where for a smart phone or phone camera to be useful, it needed a technological innovation. And the technology was there; it just had to be adapted and then commercialized to smart phones.

The sheer scale of the camera phone market and the money involved in that market drove the innovation, which was pretty cool. There’s other innovations, more incremental, that have moved across as well. You know about microlenses on sensors, the little lenses that go on top of each pixel. Square microlenses are rolling into the camera market now. It’s something we’ve been using for a little while. Those will give you incremental improvement and sensitivity also versus the round microlenses that traditional camera manufacturers have been using for a while. The square ones are much more efficient; they cover the pixel better; they gather more light; they give you better sensitivity. Other incremental improvements that in some cases are adapted from smart phone technology and in some cases are innovation that you kind of scratch your head and say, ‘Why didn’t they do that before? Why couldn’t they,’ are rolling into cameras this year to drive better sensitivity, faster image processing, all kinds of cool stuff.

DE: Talking about image quality leads right into the next question. We recently got a look at the NX200 image quality and it really surprised us. It was such a significant advance over what the NX100 was. We’re curious what kinds of changes were made in the sensor technology that led to that. I mean, what happened between the NX100 and the NX200?

JK: The NX200 is using a completely new sensor platform. It’s a Samsung CMOS sensor. It uses the square microlenses I was talking about as well. There’s a bunch of stuff in that sensor I can’t talk about at this point as it’s new in the market. But really, the new sensor platform is what’s making that possible. The other piece is the DRIM image processor generation that we used in it. Samsung develops our own image processing and DSP chips. The latest generation of that that does the rapid signal processing, rapid JPEG creation, all that stuff, has some rather significant and new noise processing in it, color correction, color processing as well. There’s a lot in that new sensor that aids with our fast autofocus as well, because that sensor that’s in there is also the sensor that we use for auto focus.

DE: Relative to auto focus, you have the ability to read out portions of the image very rapidly to support that.

Shawn Barnett: Is Samsung thinking of offering that to anyone else or is that something Samsung is going to keep vertically integrated?

JK: I don’t know. I would hope as a Samsung person that we don’t send that core technology out, because right now it’s unique and it’s at the top of the market.

DE: It was a very significant jump. We were very happily surprised by the NX200. It looks like the NX200 really hit the nail on the head. And you’ve got a surprisingly strong lens line-up, given that you’re sort of launching out on this whole new platform all by yourselves. You’ve got a lot of neat lenses, both primes and zooms. You are out there all by your lonesome doing a new camera format. How is the NX200 being accepted and what are the sales trends looking like for the line?

JK: It’s been accepted very well. Globally it’s doing incredibly well. Obviously it’s the top of the market in Korea for removable lens cameras. Outside Korea, it’s been recognized as really awesome in terms of image quality. Right now I would say it's arguably the best image quality removable lens camera shipping in the market until something ships that’s better image quality. From a market standpoint, it’s a premium product. It’s expensive. It’s not down there at a four or five or six hundred dollar price point. We are working – We really changed strategy with NX200. We wanted to build the best camera we could and with best image quality, build the credibility of the brand, enhance it, and I think we’ve done it with the NX200.

DE: As soon as you mentioned Korea, we were curious about that ourselves. Is there a big, sizeable bump in Korea for a Korean-based company and their products versus the competition?

JK: Well, Samsung’s a Korean brand. It’s the strong and dominant brand in Korea. With the brand comes a lot of strength. People in Korea don’t hesitate at all when considering Samsung as a camera manufacturer. They know Samsung is a top, premium brand in Korea. In the U.S., Samsung has relatively recently entered the market. In televisions 15 years ago, people weren’t aware of Samsung; now Samsung’s number one in smart phones and telephones. Samgung’s got in great position in the U.S. market. In cameras, we haven’t focused on cameras until recently. I hope and expect and think that everyone will see Samsung take a similar position in digital imaging over the coming time.

DE: There’s been a significant shift in Samsung’s approach to the camera market too. For a long time they were focused on the low unit cost and high volume, and that carried with it a certain consumer perception as well. Now we see you’re very consciously working toward the higher end. Even in the point and shoot line, you’ve really been trying to get out of that bargain basement category, and it seems with some success.

JK: A lot of that comes with us being able to vertically integrate. Now that we’re making our own sensors and image processors and core technology as we’ve learned all this stuff, we can bring in unique capabilities to differentiate the market. One of the cameras we announced at CES is the WB850. It’s kind of the top of our compact line. That has a custom backside illuminated sensor in it, BSI CMOS sensor, that we designed. It’s our sensor. One of the cool things, since we’re making the sensor ourselves and we’re not buying our sensor from somebody else like most of the market tends to do, we’ve been able to add technology to the process. That sensor we can clock out. We’ll be doing 1080 video off that sensor in the camera, shooting in HD video. At the same time, just like our WB750 we launched earlier in the Fall, we can pull a high resolution still off of it as well. So we’re clocking out the whole sensor when we’re making video. You can hit the shutter button at the top and pull out a 12 megapixel still.

DE: It’ll pull a full 12 megapixel out of the middle of it?

JK: Without interrupting the video stream, which is pretty cool. And that’s unique in the market. No one else is doing that. Everyone else is taking a two or three megapixel frame out of the video stream that they’re processing and saving that off as a still.

DE: So you’re making your own backside illuminated sensors. I thought Sony owned the intellectual property around BSI.

JK: I don’t know, I haven’t done a study on intellectual property on BSI. BSI sensors have been around a long time. There’s a tremendous amount of prior art on the technology. There actually are a lot of people making them. I’ve been working personally with BSI sensors, I want to say at least 15, maybe 16, years in the scientific market.

DE: So it’s not the fundamental idea of BSI that is patented or owned by Sony. It might be owned by somebody, but there may be some kind of tweaks pertinent to the consumer camera market?

JK: Yes, I think in the consumer camera market they might be perceived that way because they might have been one of the first ones to implement it in a camera, but they certainly weren’t the first to implement it in imaging products.

DE: Turning to your product line, the NX11 came out as a follow-on to the NX10 about a year ago. Will there be any future viewfinder equipped CSCs, compact system cameras, or is the NX200 the way of the future?

JK: Well, with any removable lens camera system, for it to be a system you need more bodies. You need more lenses. Personally, as a photographer, I want as much stuff as I can have in the family. We will continue to invest and expand the line, but I really can’t comment on future product directions relative to bodies at this point.

Arthur Etchells: But to the extent that it is a camera system, one would think that you would see a wealth of lenses and bodies.

DE: Yeah, the more bodies the better.

JK: We certainly expect to continue to innovate on new bodies.

DE: Your focus lately in the high-end space has been on the compact system camera line, the mirrorless. Are SLRs pretty much dead going forward for Samsung?

JK: I can’t see a reason why anyone would invest serious development money in a mirrored SLR. The performance of CSCs is and can be better than a mirrored, boxed SLR – size, weight. There’s no reason that I can think of to invest in those types of platforms other than legacy lens-mount compatibility.

DE: Which is an issue for you guys. There’s not the legacy there.

AE: We heard from Sony something very similar: Looking 10 years out, is there even a reason for cameras to look and work how they did 60 years ago?

JK: Exactly, no, I don't think so. And if you look at something like in the NX platform, think of an NX200. It’s pretty light. Other than from the lens flange to the sensor, there’s nothing else that has to be in a formed relationship in that camera. Everything else can be somewhere else. And with the accelerated miniaturization of electronics, much faster than you’d even track the Moore’s Law for semiconductors because of the physical stuff going on, I wouldn’t expect cameras to look anything like they do today. The only reason they have to be as big as they are is so people can hold them.

SB: Your answer, though, suggests that there’s going to be some kind of improvement in frame rate, because that is one limitation of mirrorless cameras at this point.

AE: Frame rate and focus.

JK: Yes. As there’s always innovation, there can always be an improvement relative to frame rate. All of these cameras can run 30, 60 frames a second for video. It’s not architecturally impossible for them to be running those rates for a full resolution.

SB: Right.

AE: We've been asking people what is driving the recent development energy around compact system cameras. In just the past year or two there's been a lot of development and innovation. Why now?

JK: I think the innovation at a bigger level in the camera market is driven to the rather significant turmoil or change that may have been caused by rapid adoption of smart devices, but at the low-end of the camera market. Everyone’s got these things. That’s what they’re using as low-end cameras. There aren’t more low-end cameras selling. That being said, on the high end long zoom, DSLRs, CSC, all of those areas of the market are shipping much more product than they ever did. There are more DSLRs shipped last year than any year in history, even when there were film SLRs.

As people have these cameras with them all the time, these smart phones, they’re taking more pictures. They’re rediscovering photography. The apps on the phones are helping them enjoy photography and editing and all that stuff more. And then the next progression of that for a lot of people is, they want better image quality. They want more flexibility and they’re learning about optics and they’re learning about lenses and they want zoom. And the natural progression is to something better, whether it’s a 10X or 18X compact long zoom camera, that’s much better. On our new compacts, our WB series, the 150 and the 850, we put full manual controls on those. They’re compact cameras. They essentially look like point and shoots, but you can change aperture, shutter speed, all that stuff. That’s pretty cool. And that’s incredibly compelling to all of these people in the market that are rediscovering photography. Even for photographers who are looking for something more compact to carry because they don’t want to carry a big DSLR with them, they can get the same kind of control they’re used to for a lot of vectors with these cameras as well.

AE: So you see it as mainly consumer demand, product market fit, and that sort of equation rather than specifically technological advances that have allowed this?

JK: Well, a lot of the technological foundation has been there for a while. It hasn’t been invested in by a lot of companies. BSI is a good example of that; connected Wi-Fi is a great example of that. All the smart devices we have laying around have radios in them; why aren’t there radios in cameras?

DE: But with Wi-Fi, that’s been getting a lot more integrated, though. One of the big products of the show, Qualcomm now is talking a lot about embedded Wi-Fi and embedded wireless. So the form factor and integration level of that has really increased over the last years. It’s now more compact, with more power. So there’s more demand and more push for it now, but there’s also a sort of an enabling technology there that has finally made it small enough and cheap enough.

JK: Small enough and cheap enough really is driving it, but from a lifestyle standpoint think of all the things in your life that are wireless and working together. Your tablet – because everyone has a tablet after this last holiday season, right? Your smart phone, your TV or your DVD player have had Wi-Fi for years, whether you used it or not, probably. I want the Wi-Fi, the smart refrigerator that Samsung has, but my wife won’t let me buy it. All these things interconnect and our cameras will talk to it, by the way.

All these things that are connected in our lives. And for those of us who photograph a lot, our cameras should be, too. And a lot of us never really pushed it. I never thought about it that much until the last couple of years when I’ve been working on it, because I’ve been using cameras for 30 years. They never had it before; why does it need it now? But every other device I have has it, and most of the devices I have have cameras in them. So it’s an, ‘Oh, my gosh. I forgot to put Wi-Fi in a camera,’ kind of thing.

DE: We’re seeing a recent proliferation of sensor sizes. You know, for a long time it was whatever the smallest, compact camera sensor was, more than it was APS-C or it was full frame, but now there’s this whole range of sensor size, a whole gradation between the two. Do you think that’s going to be a permanent feature of the market going forward, or at some point will there be a shakeout and we’ll end up with fewer?

JK: I expect them to shake out. There’s a lot of really good back stories about how the sensor sizes came to be.When I was working for one of my previous employers we stumbled into that. Simply, ‘How big should we make the sensor?’ ‘Well, let’s make it this size.’ Pretty much that’s how we got to APSC. There’s a lot more to it than that and I probably shouldn’t go into it here, but similar to other manufacturer’s sensor sizes, a lot of them were because they had to because one piece of equipment wouldn’t fit it or whatever. The story’s not so much from the optical standpoint, but more so from the...

DE: Whatever size the stepper would handle or something for the integrated circuit.

JK: Exactly. So there’s a lot of that. There’s a lot of history to it.

DE: We’re now seeing large-sensor, fixed-lens cameras. Do you see there being a market for them? Is that something that Samsung might do at some point?

JK: I see a market for it. A lot of those are really nicely optimized platforms for a variety of reasons. I see most of them as steps in technology, though, to get from one space – like get from DSLR to removable lens in a rational format.

In a perfect camera design with unlimited resources and money, you would optimize the sensor size to the optics you could do for the size of the camera you wanted. You’d start with a camera size and work backwards. There’s no reason why you can’t make a small sensor that has great image resolution with a great lens system. The only advantage I see for some of these large-sensor, fixed-systems over small sensor, fixed lens systems is really tied to depth-of-field, core optics stuff. That’s it. There’s no other technical value, theoretically, in those systems.

DE: But then if you put a zoom lens on it that loses aperture as soon as you zoom it the least little bit, then you lose some of that depth-of-field advantage.

JK: Right.

DE: Getting back to Samsung’s product line, the DualView was a huge success for Samsung a year or two back. That was just a runaway best seller that nobody expected to be as successful as it was, but in this latest round of announcements there’s only one new DualView model. Has interest in it dropped off of late?

JK: Actually DualView has been tremendously successful for us. Those people in the U.S. camera market who think of Samsung and cameras together usually jump to DualView as the first thing they think of. We’ve announced a new DualView piece, the DV300, under this Samsung smart camera moniker that we’re rolling out in the spring with connected cameras. The DV300 gives you DualView, which, with Wi-Fi and with connected, interoperability with smart devices, which makes it probably the best sharing camera on the market. You can go out, take a picture of you and your friend, and get it on Facebook immediately. That self-shot mode in DualView is what resonated with a lot of customers. And the ability to take that self-shot and get it out immediately, or even self-shot videos, I think will again recapture the imagination of a lot of people.

DE: So DualView is still a really significant part of your volume and of your product line.

JK: Yes.

DE: What does your crystal ball say we’re going to see for 2012? What’s going to happen with the economy?

JK: I think we’re looking for 2012 to be a really strong year for imaging devices, particularly for Samsung, as we’re moving into this converged smart camera realm. We hope to take a much stronger position in the digital market, particularly in the U.S. We’re hopeful that the economic situation will improve, and that there won’t be natural disasters and tragedies like there were in the past two years that will also impact the imaging market. We’re very hopeful. We’re very excited.

DE: By hopeful do you mean cautiously optimistic?

JK: No. I mean we’re hopeful relative to the economy. We’re tremendously excited about all the new technology we’ve brought in.